Now that I know the law, now what?

1. Now that I know the law, now what?

2. Why public procurement should be important to us?

3. Public procurement is a huge market that impacts on economic development World Context • Government procurement of OECD member countries is 19.6% of GDP or USD 4,733 billion (1998). It is 14.5% of GDP for non-member countries or USD 816 billion • Total government procurement worldwide is 82.3% of world merchandise and commercial services exports (1998). Country Context • Around 30% of GDP is circulated in Public procurement of MONGOLIA

4. Procurement performance in 2011 (in bln MNT) NCB-National Competitive Bidding, LB-Limited bidding, DC-Direct contracting, Com-Comparison

5. Inefficiencies in procurement… • Undermines the ability of states to respond to society’s needs. It compromises the government’s ability to deliver public goods and services, or laws and regulations • The most vulnerable members of society (e.g. poor) are most affected. • More reliant of public services (health, education, water) • Less capable to pay • Pay higher share of disposable income • Distort relationship with authorities, e.g., lose confidence in politicians and judicial system • Less capable to fight (knowledge, money, fear)

6. What procurement inefficiencies do to public services? • Education • Shortage in school buildings and textbooks for school children • Public Works • Substandard roads • Unsafe school buildings • Health • Highly priced medicines

7. Education Unfinished school buildings This school building cost: MNT/USD

8. Health Highly priced medicines Medicines in this aimag cost: MNT/USD while in another Aimag, the same medicines cost MNT/USD

9. Public Works Poor quality of roads This road was built on ? and in just a few months, It looks like this.

10. Procurement inefficiencies

11. Example of procurement irregularities • Officials not involved in procurement recommend or insist on a particular agent or consultant (i.e. selection process not followed) • Unexplained or unusual delays in the procurement process (kickback amounts are negotiated, ways are found to work around project controls)

12. How close monitoring of the process can detect such practices? • Officials not involved in procurement recommend or insist on a particular agent or consultant (i.e. selection process not followed) • Formulation of technical specifications that favor a specific bidder • Winning bidder is not among those who participated in the process • Winning bidder did not give the best offer to government

13. How close monitoring of the process can detect such practices? • Unexplained or unusual delays in the procurement process (kickback amounts are negotiated, ways are found to work around project controls) • Procedural rules are not followed (time limits per procurement stage and logical flow) • Prolonged evaluation even when there is a clear winner based on best bid offer criteria • Post-qualification of potential winning bidder is pursued on extraneous grounds with clear intent of disqualifying bidder to favor next-ranked bidder

14. Red flags in the different procurement stages

15. Procurement Process • Procurement planning • Preparation of bid documents • Public announcement of invitations for tendering • Pre-bid meeting and clarification of bids • Submission of tenders • Opening of tenders • Review of tenders • Evaluation of tenders • Authorization to enter into a contract

16. Procurement Planning and Preparation of Bid documents • Procurement projects identified are not needed • Project specifications are designed to fit a specific bidder’s profile making bidder sole provider of service/project to be procured (Tailor-fitting) • Bid specifications are too narrow or too vague • Wrong size/ packaging of contracts • Poor or failure in planning therefore more “urgent/ emergency” purchases than open competitive bidding • Bid documents – evaluation criteria and methodology results in unlevel playing field

17. Public Announcements • Unreasonable pre-qualification requirements • No proper advertising of the bids • Unreasonably short time to submit bid • Incomplete preparation before advertisement – like right-of-way problems • Wrong medium or low circulation for advertisement • Ambiguous/unclear eligibility criteria

18. Submission, Review and Evaluation of Bids • Unjustified or repeat sole source awards • Repeated selection of unqualified contractors  • Attempts to reject the low bidder on spurious grounds • Substantial similarities in the bidding documents when there is no obvious reason for it • Unqualified contractor selected, or contractor selected who is not the lowest bidder

19. Submission, Review and Evaluation of Bids • Use of subjective (not pass/fail) eligibility/evaluation criteria • Delay between bid submission and bid opening • Applying evaluation criteria not prescribed in the bid documents • Manipulating the arithmetic correction of bid • Declaring an important deviation to be minor, and vice versas

20. Awarding of Contracts/ Contract Implementation • Questionable disqualification of the winning bidder and re-bidding • Low bidder is selected and the contract award is followed by a change order increasing the scope or price of the contract • An extension given on an existing contract rather than re-bidding • Persistently high prices • Prices grouped around the Owner’s Estimate • Few or the same bidders on a range of contracts • High price awards Important to record to establish patterns of behavior indicative of collusion

21. Contract Implementation • Works are of poor quality and need frequent repairs/ consultants work product is poor or never used • The project repeatedly fails tests or inspections • Tests are delayed by parties to the works or the latter insist on choosing the test sites • Complaints from users or beneficiaries accumulate • Modification of specifications, terms, prices, delivery, completion dates, quantities, security requirement during contract preparation

22. External conditions •  Apparent connections between the bidders such as common ownerships/Directorships, sharing fax numbers, common addresses etc on bidding documents

23. Civil society and Public procurement

24. Government-Society Relations • Society • Contributes to government thru taxes for provision of public services • Elects government leaders • Ultimate check and balance through elections and stakeholdership activities • Government • Sets legal and policy framework for social relations • Collects taxes from people • Provides public services

25. Government provides public services directly and indirectly Directly Indirectly Government procures services of private entities to provide public services in their behalf Contractor A constructs school building for our school children) • Government employees process our registration papers • Government paid teachers teach our school children This is where CSOs can help government.

26. The Different Roles of Civil Society • May have representation in the Evaluation Committee (Art. 47.4) • May be selected through competitive bidding to undertake performance monitoring, evaluation, and audit of procurement and contract implementation • As direct stakeholders, undertake general assessment of public procurement

27. Procurement Guiding Principles(Article 6) • Transparency • Equal opportunity to compete • Economy and efficiency • Responsibility These same principles can inform the monitoring framework of civil society groups evaluating public procurement.

28. CSO Monitoring Framework Questions to ask when monitoring Tips and notes for monitoring Transparency Fair competition Economy/ Efficiency Responsibility

29. Final Note/ Summary • Government provides public services directly and indirectly • Directly: Government people directly service the citizens (e.g. government employees process our registration papers, government paid teachers teach our school children) • Indirectly: Government procures services of private entities to provide public services in their behalf (e.g. Contractor A constructs school building for our school children) This is the part that we are trying to monitor closely so that the private entities hired by government really do their job as paid for by citizens’ taxes.

30. Thank you!